March 24, 2023

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A new tool called Oracles, that supplies asset price information, was introduced by Uniswap, bringing scalability and solutions to the protocol. It is intended for engineers who have run across difficulties when creating smart-contracts that are compatible with the Ethereum documentation. 

The creator of TWAP

Oracle’s TWAP capabilities are unlocked by Uniswap v3. The goal of the launch of Uniswap v2 was to enable mainnet developers to create redistributed on-chain tools free of all transactions. Uniswap v3 expands on this feature by incorporating an additional gas feature. In essence, smart contracts connect to these oracles for data on asset prices.

Consequently, it is essential to Oracles’ ability to function. However, those with evil intentions profit from their gullibility and use it to influence economic destiny. To work with Proof-of-Work, Uniswap initially developed TWAP Oracles. 

Their backdoor safety framework, which is interesting, managed to change the game by penalizing the bad players. After moving from Proof-of-Work to Proof-of-Stake, the Ethereum blockchain underwent its most significant modernization. Compared to PoW, this provided the network with a lot more benefits. 

The way the system works

This had the notable effect of giving operators the option to bypass the oracle. By doing this, money loss from default is avoided. But some restrictions still exist. This operates like that: you can pay for expensive gas without having to pour a lot of money into the service.

In other words, a validator with enough money can’t influence the marketplace because doing so would undermine clients’ reliance on the system. Similarly, it weakens their place in the marketplace. 

The potentiality of this system is being investigated by TWAP developers as a result. In addition, they want to find solutions that might arise as a result of oracles being used in a variety of present and future protocols. Overall, the findings will be used as the foundation for potential future actions by Uniswap Labs against Oracle, though they are still being studied.

For some protocols to determine their value, the chain’s asset prices must be known. As an illustration, credit protocols frequently need to determine the value of the debts they provide. Oracle is crucial to these blockchains because of this.

Credit protocols can repay loans prior to the expiration of collateral by being aware of these values. If loans are made without enough security, lending standards may be jeopardized. 

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